1099-R Distributions from Kansas Public Employees Retirement System

[AGW2]

My 1099-R 2021 KPERS distribution has been entered on my Turbo Tax Mac CD edition. This was my first year of retirement distributions each month. When I enter the Distribution amount, the Turbo Tax shows I owe KS State Tax. KPERS has already taken State taxes out and there should be no additional tax. Is this a Turbo Tax mistake?

Thanks, AGW2

[BillM223]

This is not a TurboTax mistake, because that is not how tax withholding works. The state of Kansas has no idea what your tax bill is going to end up being, even if it knows the size of the KPERS distribution. This is because the state has no idea what other income items you have or what other deductions, for that matter.

So it is customary to withhold nominal amounts, say 10% or 20%, which may or may not be enough. It's also possible that KPERS reached out to you to ask you how much you wanted withheld. Of course, TurboTax would have no idea what that amount would be.

This is true for W-2 withholding, withholding for IRA and pension distributions, and even gambling winnings. The amounts withheld - unless you specify an amount - are just a guess that won't be reconciled until you file your tax return.

[BrentH99]

I am having this same issue.  I took a normal distribution from my IRA that was a rollover from a KPERS Lump Sum distribution.  I have already paid KS income tax on that entire lump sum amount, so when I get a normal distribution from it, I should not have to pay any KS income tax on it again.  The 1099-R does not have anything on it to indicate it's KS tax free (still have to pay federal income tax on it), and I can't find a way in TurborTax to indicate it's originally from a KPERS Lump Sum distribution.  HELP!

[LindaS5247]

In general, a KPERS benefit is taxable for federal income tax and not for Kansas state tax.

To enter your tax-exempt  State employee pension, you will first have to enter the necessary information in your Federal Income tax return, which will then flow to your KS state return.  You have to indicate when you initially enter your Form 1099-R, that it is a tax-exempt pension in the State of KS.  You may have to indicate it as a Qualified Governmental Retirement Distribution.

Find your Form 1099-R by typing 1099-R in the search box, and follow the steps below:

1. Click on Jump to 1099-R
2. Scroll down to Retirement Plans and Social Security
3. At IRA,401(k), Pension Plan Withdrawals (1099-R), click Update
4. Click on Edit then Continue
5. Answer the next questions until you get to the Where Is This Distribution From? screen
6. Select the source State Employees and enter the information requested: This will carryforward the information needed to your state tax return to make your pension tax exempt.
7. Click on Continue
8. Click on From a Qualified Plan
9. Continue answering the questions

Now on your state return: 

1. At the Changes to Federal Income page, scroll down to Received retirement income, click Start/Update
2. At the Retirement Distributions Summary page, click on Edit State
3. If no additional information is required, click on Continue
4. Click Done

To view your State Return in TurboTax:

• Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
• With the Tax Tools menu open, you can then:
• Select Print Center and then Print, Save, or Preview This Year's Return to preview your entire return, including all forms and worksheets (you may be asked to register or pay first).
• View only your 1040 form by selecting Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu.

Please click here for a  TurboTax Help link to watch a video to help walk you through the steps. 

Click here to contact Turbo Tax for assistance.